Will electrical vehicles take a bite out of the oil market?
When will cars powered by gas-guzzling internal combustion engines become obsolete? Not as soon as it seems, even with the latest automotive news out of Europe.
Very first, Volvo announced it would begin to phase out the production of cars that run solely on gasoline or diesel by two thousand nineteen by only releasing fresh models that are electrical or plug-in hybrids. Then, France and the U.K. proclaimed they would ban sales of gas and diesel-powered cars by 2040. Underscoring this trend is data from Norway, as electrified models amounted to forty two percent of Norwegian fresh car sales in June.
European request for oil to propel its passenger vehicles has been falling for years. Many experts expect a sharper decline in the years ahead as the shift toward electrified vehicles spreads across the world. And that raises questions about whether surging electrical vehicle sales ultimately will cause the global oil market, which has grown on average by one to two percent a year for decades and now totals ninety six million barrels per day, to decline after hitting a ceiling.
Energy experts call this concept "peak oil request." We are debating when and if this will occur.
A forecast with caveats
The International Energy Agency (IEA), which represents twenty nine oil-importing industrial countries, produces bellwether forecasts that foresee electrical cars phasing in leisurely. Its baseline projection envisions one hundred forty million electrical vehicles on the world’s roads by 2040, or about seven percent of all passenger vehicles at that point. In comparison, only two million electrical vehicles are operating today — 0.Two percent of the 1.Two billion on the road. The IEA estimates this shift will save almost two million barrels per day of oil, relative to its business-as-usual projection of the world using at least seventy million barrels of oil per day for transportation by 2040. That consumption level would mark a thirty percent increase from toughly fifty four million barrels now.
If electrified vehicles sales grow quicker than the IEA expects, that projection might miss the mark. Should that happen, would global oil request flatten or decline?
Our research at the Institute of Transportation Studies at the University of California, Davis shows that encouraging electrical vehicle purchases is just one way that policymakers can help phase out oil consumption — one key to reducing the greenhouse gas emissions that stoke climate switch and health-threatening pollution. [knot:field-gbz-pull-quote:0]
Given the dominance of internal combustion engine passenger vehicles, which include cars, SUVs and light trucks, substituting them all with electrical models will take decades. Automobiles are durable goods that typically remain on the road for ten to fifteen years. Not all drivers will buy a fresh car, let alone an electrified one, soon.
In other words, even if (hypothetically) all fresh car sales were to instantly turn electrical, it likely would be sometime after two thousand thirty before gasoline cars would vanish. Besides, passenger vehicles consume only about twenty six percent of the oil used worldwide. Given these stubborn realities and the fact that electrical vehicles still represent a little portion of new-car sales, reaching a peak in oil request by two thousand forty would require more than widespread conversion to electric-powered cars.
But together with other trends taking form, electrified vehicle growth potentially could revolutionize transportation enough for oil consumption to stop growing within this time framework.
Ride-sharing and oil
Even if all of Europe mandated that only plug-in vehicles could be sold, commencing in 2030, and China followed suit by 2035, that wouldn’t bring about peak oil request by 2040. According to our research, global oil consumption would keep growing until as late as 2050, in part because so many cars and trucks running on gasoline and diesel — especially in developing countries — will remain in use.
To see if oil request still could peak by the middle of this century, if not sooner, we recently began preliminary research modeling the effect of urban sustainability policies on oil request in the future. This is an significant area of analysis since U.S. mayors and municipal leaders from around the world reaffirmed their commitment to climate-change act after President Donald Trump determined to back out of the Paris climate accord.
Using a set of scripts regarding potential technological and policy interventions in work we will publish soon, we modeled different future oil market request conditions. We focused on four major trend lines: vehicle electrification; ride-sharing services such as Uber and Lyft; more sustainable freight that runs on alternative fuels or reduces vehicle miles traveled through computer-assisted optimization; and urban car-free zones.
We found that making more car-free pedestrian areas in big cities would make a massive dent in global oil request. This practice — already common in cities such as Copenhagen and Madrid in Europe and Chendu, China — could make oil request max out by 2030, as long as enough governments aggressively encouraged drivers to switch to electrical cars and mandated more fuel efficiency for road-based freight. [knot:field-gbz-pull-quote:1]
Trucks don’t last as long as cars, and many countries are considering policies to encourage the use of natural gas, hydrogen or electrified vehicles for heavy-duty trucking.
Commercial ride-sharing might also pare oil request by reducing the number of miles driven overall if it encourages carpooling. This industry could, in addition, hasten the shift to electrified vehicle dominance if — as widely reported — it embarks to rely on a fleet of autonomous (driverless) vehicles, which predominantly would be electrified.
But ride-sharing could fail to reduce fuel request in the brief term if people wind up taking more trips and traveling more miles in passenger cars and relying less on the bus, transit or city train than they used to. Some research suggests that could be happening. For example, scholars at University of California, Berkeley found that a third of the riders they surveyed in San Francisco used these services instead of public transportation — not to substitute trips in taxis or their own cars.
In brief, there is no ensure that more ride-sharing means we’ll burn less oil.
What cities can do
In another investigate, our team at UC Davis teamed up with the Institute for Transportation and Development Policy, an independent global nonprofit, and modeled three urban transportation policy scripts. We found that global fresh vehicle sales in two thousand forty will total inbetween six hundred million, if ride-sharing and transit flourish, and Two.1 billion vehicles, should the ride-sharing industry stall — a fat difference.
Metropolitan policymakers can use other contraptions. Creating car-free zones, making parking expensive and levying congestion taxes and road usage fees are some examples.
Overall, we believe there is a reasonable chance global oil consumption will peak by 2040. Especially given the growing preference of city dwellers to live in places with less congestion and pollution, a shift away from cars with internal combustion engines — and from cars in general — looks not only likely but unavoidable. It also seems fairly likely that any company betting on the continued growth of oil sales will be disappointed.
Goldman Sachs says the world could pass this milestone sooner. Researchers at the U.S. investment powerhouse predict that with widespread reliance on electrical cars, slower economic growth and a decline in (largely petrochemical-based) plastic production, global oil request could max out by 2030.
However long it takes, shifting to electrified vehicles might not make oil request level off or decline on its own. But plug-in vehicles, combined with other policies, trends and technologies, clearly will take a toll.